What is the Department of Foreign Affairs and Trade (DFAT)?

The Department of Foreign Affairs and Trade (DFAT) is an important office of the Commonwealth of Australia, responsible for advancing and protecting its international interests to achieve its security and prosperity objectives.

The current structure of the department was established in 1987, when various ministries, including Foreign Affairs, Commerce, Trade, and Tourism, were amalgamated to form DFAT.

Through co-operation with international partners, DFAT works to deal with global issues, improve business ties with other countries, implement international conventions, and help Australians in other countries. DFAT also manages Australia’s presence in other countries through 120 diplomatic missions.

Key Functions of DFAT

The following are prominent responsibilities or functions of the DFAT:

• Promotion of trade, including unilateral and multilateral negotiations
• Cooperation with other countries to deal with global challenges
• Providing humanitarian assistance
• Regional stability and counter-terrorism diplomacy
• Protection and assistance of Australian nationals overseas through consular services

Australian Sanctions Office (ASO)

The Australian Sanctions Office (ASO), a key component of DFAT, oversees the implementation and enforcement of sanctions in the country. Australian businesses and individuals are obliged to comply with the following two sanctions categories:

• UN Sanctions:

All UN members including Australia are under a legal contract to implement sanctions agreed by the UN Security Council. UN sanctions are imposed to cater issues of international importance, like terrorism and its financing, proliferation of nuclear weapons, and violatioins related to human rights. Charter of the United Nations Act 1945 provides the legal basis to implement the UN Sanctions in Australia.

• Australian Autonomous Sanctions:

Australia also implements an autonomous sanctions regime based on its independent foreign policy, which may extend beyond UN sanctions. These sanctions are administered through the Autonomous Sanctions Act 2011 and the Autonomous Sanctions Regulations 2011, aimed at particular individuals, entities, or sectors that pose a threat to international peace or Australian interests.

The DFAT Consolidated List

The ASO is responsible for maintaining the DFAT Consolidated List. This list is a central compilation of all individuals and entities subject to targeted financial sanctions and travel bans in Australia. The information about the listed entities contained in the list:

• Full legal names and aliases
• Citizenship and residency details
• Last known addresses
• Place and date of birth
  This list is compiled in order to support regulated entities and businesses dealing in the cross-border trade of goods or services in conducting sanctions screening and managing their compliance obligations.

Key Restrictions Under Sanctions Laws of Australia

Under the Australia Sanctions Laws and Regulations, designated individuals or entities may be subject to different restrictions, including:

• Asset Freezing: Freezing assets and financial resources of entities designated under UN or Autonomous sanctions means they no longer have access to them, nor can they use or transfer them.
• Travel Bans: Designated individuals and even vessels may be restricted from entering or transiting through Australia.
• Trade Restrictions: This includes bans on the export, import, and transportation of specific goods and services from or to a specific region, for example, bans on military goods, minerals, and dual-use technologies.
• Financial Restrictions: Bans or limits on offering/providing financial services, investments, or new loans to sanctioned individuals and companies.

Violations of these measures may result in criminal conviction as outlined in the Autonomous Sanctions Act 2011 and or the Charter of the United Nations Act 1945 and their associated regulations.

Penalties for Non-Compliance

Individuals and entities in Australia must comply with its sanctions laws and regulations. Non-compliance could bring several consequences, even if committed unknowingly:

• Severe Civil and Criminal Penalties: Fines up to 2,500 penalty units ($825,000 as of 7 November 2024) for individuals and imprisonment of up to 10 years. Criminal offenses committed by a body corporate are liable to a fine of 10,000 penalty units ($3.3 million).
• Regulatory Action: Potential loss of licensing or other disciplinary action by ASO.
• Reputational Risk: The public announcement of fines and violations causes panic among stakeholders and customers, depleting hard earned trust, ultimately losing revenue.

Financial institutions and businesses dealing in cross-border trading of goods and services should audit their supply chains to check they’re not dealing with sanctioned parties, even unknowingly or recklessly.

Conclusion

The fact that sanctions are regularly updated and vary from region to region makes sanctions compliance complex and challenging. Australian businesses are expected to implement adequate due diligence and effective screening systems. This means conducting real-time checks against the sanctions list, establishing strong internal controls, and equipping staff with tools and training for continued compliance.